USD/CAD: Trading the Canadian Jobs Oct 2015

Canadian employment change is an important leading indicator which has a significant impact on the markets. Traders and analysts carefully scrutinize employment figures, and a reading higher than forecast is  bullish for  the Canadian dollar.

Update:  Canadian jobs report beats with +12.1K, but unemployment rises to 7.1%

Here are the details and 5 possible outcomes for USD/CAD.

Published on Friday at 12:30 GMT.

Indicator Background

Job creation is one of the most important leading indicators of overall economic activity. The release of the employment change indicator simultaneously with the unemployment rate is highly anticipated and  is often a  market-mover.

Employment Change posted an excellent gain of 12.0 thousand in August, easily beating the estimate of -4.8 thousand. The markets are expecting another strong reading in August, with an estimate of 10.5 thousand. Will the indicator match or beat this prediction?

Sentiment and Levels

The Canadian dollar has posted some gains of late, thanks to stronger oil prices. The markets are still hopeful of a rate hike by the Federal Reserve before the end of the year, so any hints in this regard could bolster the US dollar. So, the overall sentiment is neutral on USD/CAD towards this release.

Technical levels from top to bottom: 1.3346, 1.3213, 1.3165, 1.3063, 1.2930 and 1.2798.

5 Scenarios

1. Within expectations: 7.0K to 14.0K: In this scenario, USD/CAD could show some slight fluctuation, but it is likely to remain within range,  without breaking any levels.
2. Above expectations: 14.1K to 18.0K: A reading above expectations would be an indication  of growth in the Canadian economy,  and could  push the pair  below one  support level.
3. Well above expectations: Above 18.0K: A sharp rise in employment  numbers could propel the pair downwards, and a second support  level could  be broken.
4. Below expectations: 3.0K to 6.9K: A lower than expected reading could push USD/CAD upwards, with one resistance level at risk.
5. Well below expectations: Below 3.0K: A poor reading will likely hurt confidence in the loonie and the  pair could break above a second resistance level.

For more on USD/CAD, see the  Canadian dollar forecast.